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Corporate interest restriction

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HMRC is consulting until 26 May 2017 on the draft Corporate Interest Restriction (Financial Statements: Group Mismatches) Regulations 2017, which address two situations where accounting differences between the entity and group level could affect application of the new corporate interest restriction rules. These regulations will:

  • recognise a loan relationship on the amortised cost basis in the group accounts where it is recognised as such in the issuer company’s financial statements and is subject to fair-value accounting; and
  • where an external loan is in existence between two group members, spread the gain or loss on derecognition of the loan in the group accounts over the remainder of the loan term on a just and reasonable basis.

The regulations will have effect for periods of account beginning on or after 1 April 2017 to match commencement of the new rules.

HMRC has also published an initial tranche of draft guidance on the new corporate interest restriction, for comment until 31 July 2017. Further draft guidance is due to be issued by 31 May. When finalised, this guidance will be incorporated into HMRC's corporate finance manual. See